So you have had your business for a number of years and you are successful for all intents and purposes. You have an excellent product, you have an active client base that purchases from you regularly. You know how and where to get new clients and how to keep the ones that you have. Your team is pretty stable; you have a low turnover rate.
Question is: what is next?
Well, that is not necessarily an easy question to be able to answer. While many businesses might take a gut-check approach, this is similar to the spaghetti marketing approach, wherein you try a bunch of things and see what sticks. It isn’t very efficient and you are likely to have more successes than failures. This probably isn’t the best approach.
Following the market has limited shelf life and often narrow profitability. You could attempt to do the same thing, but do it better, but without a full understanding of your costs, market expectations and what they are willing to pay – how they ascribe value, you may find that you are once again barking up the wrong tree.
Some companies try franchising and licensing. Others simply open additional locations or expand some other type of way. While these are certainly ways to grow, they all require significant investment in time and research in order to do them correctly. Even if you simply increase your company’s capacity – the ability to produce more goods or services, or expand your reach and visibility through various business development techniques, without an understanding and a plan for how to respond to changes as they occur will put your company at risk.
The value in strategic planning is multi-faceted. While it may simply seem like a simple theoretical exercise, going through the process forces business leaders to look and think differently about their business and how it exists in the marketplace.
- Strategic planning should provide you with market, competitor, industry and other intel so that you can discover opportunities that you may have not considered or address threats that you were unaware of.
- Strategic planning will allow you to identify strategic advantages that you can use to grow your company. Imagine identifying an underserved market segment that needs what you are offering. How valuable is that? How valuable is being first to market for that market segment?
- Strategic planning will help you to see the big picture of your company. It will answer the question: if the demand for products and services increases by xyz%, the company will need to increase capacity by abc%. At the same time, there will be economies of scale the company can take advantage of, that will reduce costs by lmn%.
- Strategic planning will force you to create a vision for where the Company is going that you can share with your stakeholders. Giving people a vision of where the Company is going and empowering them to individual y contribute to that vision will increase loyalty, decrease turnover, inspire innovation and align your stakeholders with the goal.
- Strategic planning will help make change more efficient. By exploring different opportunities, you will be able to see what to do, in what order to do it, what resources will be necessary, what pitfalls and threats exist and what synergies you might be able to take advantage of.
A company, not too long ago, was invited to begin the strategic planning process. While the process was under way, the leadership scoffed at it and decided to keep doing what they were doing. They expanded quickly to meet marketplace demand, hiring staff and making other investments.
Suddenly, they ran into trouble with delivering their offerings to their clients and maintaining client satisfaction. Clients began leaving faster than new clients were being brought in. The resulted in reduced revenue and reduced personal income for the leadership team. The leadership team began making last ditch efforts to go out and get no business, but had never developed a process nor the tools to do so, so finding new clients became increasingly difficult.
Worse, yet, they found that they had been allocating too many resources to their projects, over-promising and under-charging their clients, resulting in poor cash flow.
Had they walked through the strategic planning process, these items would have been addressed ahead of time and the leadership wouldn’t have been reeling as a result of the changes that occurred. Furthermore, perhaps they wouldn’t have lost or under-charged their clients. For them, the value of strategic planning would have been immeasurable and they would be a far larger company.
If your interest is in building or maintaining an extraordinary company, consider investing in strategic planning at your company.
Rick Meekins is the Managing Consultant at Aepiphanni, the trusted advisor for business leaders who are seeking forward-thinking solutions to help them plan for and navigate through the challenges of business growth. Our entrepreneurial multidisciplinary team works with clients to develop differentiating solutions and provide direction focused on lasting, strategic results. We exist to help our clients CREATE | DESIGN | BUILD extraordinary businesses.
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Rick Meekins is the Managing Partner at Aepiphanni, a Business Consultancy, an Atlanta, GA based small business consultancy that provides Management Consulting, Implementation and Managed Services to business leaders and entrepreneurs seeking to improve or expand operations.